US credit growth is decelerating across a variety of areas

This week all eyes will be on the Fed because of its expected interest rate hike and the messaging that will accompany its policy decision. But credit markets should also be focused elsewhere, because credit growth has been decelerating across a wide array of markets for months now. And this trend has not let up in recent months, despite the Fed’s optimism about labor markets. The big outlier is consumer lending.

Charts on the relevant categories are below.

Why it matters: The economy is not necessarily accelerating, despite the Fed’s rate hikes. Credit growth is a key determinant of economic growth because spending on credit adds incrementally to GDP growth. Decelerating credit growth outside of consumer areas could be a warning sign for the US economy.

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.